thanks encyclo. So basically google categorizes IP addresses into different classes (umm I dont mean c-class, etc. - maybe I should call it "groups") which it automatically assigns a certain country?

thus some people in germany might fall in a netherlands category/group in google's algortihm (simply because the algorithm isnt perfected), and the reason why it started happening on my comp might be because my ISP could have expanded their IP network and given me a new IP address?

That's the basic idea, but it's less of an algorithm and more a case of a simple miscategorization of the IP address block. IP blocks are assigned by the appropriate Regional Internet registry. For example, in North America (and a few other places) IP addresses are assigned by the American Registry for Internet Numbers (ARIN) [arin.net]. In Europe, IP addresses are issued by RIPE [ripe.net].

If you want to do something similar to Google on your own site, you can find several geolocation databases (some for free) via a search.